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If I understand the situation correctly, lifting the ban on offshore drilling wouldn't have had that great of an effect on the price of gas. If someone said that they were going out to a spot marked "X" on the map to drill for oil, it would be several years before any oil from that site (if any was found) would make it to market. Most of the reason oil prices shot up to nearly $150 a barrel is rampant speculation. I don't understand all the technicalities, but a lot of the loopholes that led to the runaway prices were closed some time over the summer, which is why we saw the price of gas fall to where it is now.

It's nice to see the price of oil fall. Unfortunately for my wife and I (we own an apartment building where we include heat in the rent), we locked in a price for oil during the heating season based on what the price was back in May. It's a back breaking price of $4.55 a gallon. And because of that, our oil company is saying that we can't change the deal.

Oscilating between remarkable brillance and sheer stupidity with amazing regularity.

Oil, gas, politics

The largest single component to the price of anything is demand. With a world wide recession, the demand is down, not just here but in countries like China and Japan, huge consumers of foreign oil.

As far as the "new guy", aka President Elect, I say to my Republican friends the same thing I said when the "old guy" was elected: I'll support him 100% and pray he makes good decisions for all us. If he doesn't, then I''ll criticize, but until then he gets the support he deserves and there's really nothing to which we should react until he actually takes office and does something.

Like many, I opted to lock in this summer as well. Read your contract carefully. Some contracts have a buy-out provision where you can pay liquidated damages equal to a certain percentage of the gallons you have yet to purchase. With the dramatic drop, this will save most a lot of money. The local dealers were required by law to "buy" the oil you purchased within 7 days of your contract date, so it's not your dealer who's making the windfall. Their margins range from 15 to 25 cents per gallon regardless of what we pay for it. I'm stuck with two buildings at $4.29 per gallon and that sucks but if oil had gone to 200 bucks a barrel I'd be one of the lucky ones. Too bad it has to be such a huge gamble.

So, is this thread getting too close to the type of political strain that is discouraged?

Originally Posted by brdad

One of the big reasons right now that the prices are low is that the ban on off shore drilling has been lifted. Not that we are currently getting any extra oil from it, but just the concept that it has been lifted has reduced the price.

If the new guy gets what he wants and reinstates the ban and adds the taxes he would like to add, we can easily be up to $4 or more for good.

So, is this thread getting too close to the type of political strain that is discouraged?

I was pushing the envelope a bit, but it's hard to discuss gas prices without discussing factors that contribute to them. And as long as it's done without bashing each other it should be fine.

And you are correct, demand is a large factor, but speculation positive or negative have an effect as well, especially in the short term. And I was basing my predictions from campaign promises, which are never fully followed through by any party (probably a good thing).

We didn't buy in for our oil, only had a cap put on it, and they have dropped our payments recently. We also installed an electric water heater so the oil burner doesn't run in the summer, which saved 50 gallons of fuel a month, and Wednesday I installed a computerized heat manager on our boiler as well, savings there are yet to be determined - they guarantee 10%, but there's another promise I'll only believe when I see it...

Driving 100-150 miles a day lately while working in Lincoln, filling up daily is a lot less painless, so I'll enjoy it while I can.

The largest single component to the price of anything is demand. With a world wide recession, the demand is down, not just here but in countries like China and Japan, huge consumers of foreign oil.

As far as the "new guy", aka President Elect, I say to my Republican friends the same thing I said when the "old guy" was elected: I'll support him 100% and pray he makes good decisions for all us. If he doesn't, then I''ll criticize, but until then he gets the support he deserves and there's really nothing to which we should react until he actually takes office and does something.

So, is this thread getting too close to the type of political strain that is discouraged?

Dubord,
You handled that perfectly, You really would be a great addition to the board!!!!

[quote=dubord207;48792]The largest single component to the price of anything is demand. With a world wide recession, the demand is down, not just here but in countries like China and Japan, huge consumers of foreign oil.

And to add to Dan's comment, while demand for gasoline is down, demand for the "middle of the barrel" distillates remains high....such as diesel, heating fuel, kerosene and jet fuel. Hence the slower price drop of these petro products.

I have a long commute a couple times a week, 105 miles one way and of course there is geocaching. The timing of the price drop is perfect timing!

Committing to a price for oil in the summer is (on a small scale) exactly what the futures traders do every day in Chicago and NY. You are committing to a set price in the future for a commodity. If the price goes up, you win. If the price drops, you lose. In some ways it is a gamble, however if you look at the price offered and say "I can afford that, but if it goes up, I cannot afford it" than locking in a price allows you to survive the winter. You may not get a deal, but you can get by. This is what farmers go through every year. They sell soybean or corn futures, knowing that they HAVE to get x dollars a bushel. If they can sell a bushel for x + a small profit, they lock in a guarenteed profit. If they wait until harvest time, they may make out big-time, or lose the farm (literally). Futures remove the risk, but also remove the possibility of big profits. That is what the futures market is all about, people seeking $ reward for taking the risks. Oil traders this spring were making serious cash, but this fall they lost it all back. If you can't afford the risk, lock in (but you won't get any deals either).